Sizewell C gets financial backing from UK government

Thursday, 27 January 2022

The plan is for Sizewell C to feature two EPRs producing 3.2 GW of electricity, enough to power the equivalent of around six million homes. It would be a “replica” of Hinkley Point C plant, under construction in Somerset.

Negotiations between the UK government and EDF have been on-going for months and the money will be invested into the project - in Suffolk, on England’s east coast - by EDF to help bring it to maturity.

The UK government has committed to reaching a Final Investment Decision on at least one large-scale nuclear power station during the current parliament - which must end by December 2024.

Business and Energy Secretary Kwasi Kwarteng said that soaring gas prices showed the need "to ensure Britain’s future energy supply is bolstered by reliable, affordable, low-carbon power that is generated in this country".

"The funding announced today will further support the development of Sizewell C during this important phase of negotiations as we seek to maximise investor confidence in this nationally significant project."

The UK government is not committed to Sizewell C by the money, and it is not a direct investment. If the project goes ahead, the government would get the GBP100 million returned in cash or equity. If the project does not go ahead the government would seek to ensure the site "be used for other nuclear or low-carbon projects", the business department said.

It also said that the money is not part of the GBP1.7 billion of new direct government funding to develop a large-scale nuclear project announced in October.

Simone Rossi, EDF Energy CEO, said: "We’re very pleased that the government is showing its confidence in Sizewell C … together with our own investment, these funds will allow us to continue to move the project towards a financial investment decision.

"Sizewell C will benefit from being a near replica of Hinkley Point C in Somerset which is more than five years into construction and making great progress in the challenging context of the COVID pandemic. Sizewell C will provide a huge economic boost to East Suffolk where it already enjoys the support of most local people. It will also bring new opportunities for thousands of nuclear supply chain companies up and down the country."

Tom Greatrex, chief executive of the UK’s Nuclear Industry Association called it “another big step forward” and said it "sends a clear signal from government to investors that it sees projects like Sizewell C as essential to our clean energy transition".

"Investment in new nuclear capacity is essential to us hitting net-zero to ensure a solid foundation of reliable low-carbon power which will strengthen our energy security."

The pledge of GBP100 million comes at a time that the UK government is taking legislation through parliament to enable a Regulated Asset Base (RAB) funding model for new projects.

Sizewell C has an estimated cost of about GBP18 billion (USD22 billion) and the new funding plan - used for projects such as Heathrow’s Terminal 5 - is seen as an attempt to reduce the UK’s reliance on overseas investors by widening the pool of potential funding from British pensions funds, insurers and other institutional investors.

Under a strategic investment agreement signed in October 2016, China General Nuclear agreed to take a 33.5% stake in the Hinkley Point C project, and has a 20% stake in the development phase of Sizewell C.

EDF submitted a development consent order (a planning application) for the plant in May 2020 and if all goes well, has said it expects to make a final investment decision later this year or in 2023.